| Equity | Note 11. Equity August 2023 Public Raise On August 4, 2023, we completed a public offering of common stock and warrant, as follows: • 1,367 shares of common stock at a price of $ 1,009.36 per share. • $ 1,009.36 per pre-funded warrant, to purchase up to 3,592 shares of common stock at an exercise price of $ 0.001 per share and will not expire prior to exercise. As of December 31, 2024, all pre-funded warrants have been exercised. • 4,959 Series A and 4,959 Series B common warrants (together, the "August 2023 Warrants") to purchase up to an aggregate of 9,918 shares of common stock at an exercise price of $ 1,009.36 per share. The Series A and Series B common warrants will expire on August 4, 2028 and February 4, 2025 , respectively. We received net proceeds of $ 4.3 million, net of transaction costs, as a result of this offering. As of December 31, 2024 , there were 39 Series A and 39 Series B common warrants outstanding with an exercise price of $ 1,009.36 per share. If such warrants are exercised, we will receive up to an additional $ 0.1 million in gross proceeds in connection with the warrants issued as part of the August 2023 public offering. November 2023 Warrant Inducement On November 9, 2023, we entered into a warrant inducement agreement (the "November 2023 Inducement Agreement") with certain holders of our August 2023 Warrants. Pursuant to the November 2023 Inducement Agreement, certain holders agreed to exercise for cash 3,805 Series A and 4,920 Series B common warrants at a reduced exercise price of $ 379.32 . The Company also agreed to issue new common stock warrants to purchase a number of shares of common stock equal to 200 % of the number of shares of common stock issued upon exercise of the August 2023 Warrants as applicable. We received $ 3.3 million in gross proceeds from the exercise of these warrants less total issuance costs of $ 2.3 million. Issuance costs include banker and legal fees $ 0.2 million and non-cash warrant modification costs of $ 2.1 million. Because the modification represented a short-term inducement, modification accounting was only performed on the warrants that were actually exercised under the agreement. The Company recognized the $ 2.1 million modification date incremental value of the modified warrants and additional warrants issued as compared to the original warrants as an issuance cost of the warrant exercise. Additionally, pursuant to the November 2023 Inducement Agreement, we issued an aggregate of 17,450 Series A-1, Series A-2, Series B-1 and Series B-2 common warrants (together, the "November 2023 Warrants") with an exercise price of $ 379.32 per share. which were exercisable immediately following the date of issuance. The Series A-1 and Series B-1 common warrants were exercisable immediately following the date of issuance and have terms of four years and eight months and fourteen months , respectively. The Series A-2 and Series B-2 common warrants were exercisable following stockholder approval on February 5, 2024, and have terms of five years and 24 months , respectively. As of December 31, 2024 , there were an aggregate of 948 November 2023 Warrants outstanding with an exercise price of $ 379.32 per share. If such warrants are exercised, we will receive up to an additional $ 0.4 million in gross proceeds in connection with the warrants issued as part of the November 2023 Warrant Inducement. April 2024 Public Offering On April 15, 2024, we completed a public offering of common stock and warrants, in which we received gross proceeds of $ 4.6 million, less total issuance costs of $ 0.6 million, which included the following: • 25,045 shares of common stock and accompanying common warrants to purchase up to 50,090 shares of common stock at a public offering price of $ 49.95 per share; and • Pre-funded warrants to purchase up to 66,846 shares of common stock and accompanying common warrants to purchase up to 133,692 shares of common stock at a combined public offering price of $ 49.95 per pre-funded warrant, which is equal to the public offering price per share of common stock less the $ 0.0001 per share exercise price of each such pre-funded warrant. As of December 31, 2024, all pre-funded warrants have been exercised. The common warrants were exercisable immediately following the date of issuance and will expire in April 2029 . As of December 31, 2024 , we have 3,608 common warrants outstanding with an exercise price of $ 49.95 per share and 8,008 common warrants with an amended exercise price of $ 8.60 per share that were issued in connection with the April 2024 public offering (the "April 2024 Warrants"). If such warrants are exercised, we will receive up to an additional $ 0.2 million in gross proceeds in connection with the warrants issued as part of the April 2024 public offering. July 2024 Registered Direct Offering On July 1, 2024, we completed the July Registered Direct Offering with certain holders of our outstanding common warrants issued in connection with our previous offerings. We received $ 2.7 million in gross proceeds less total issuance costs of $ 0.8 million. Issuance costs include banker and legal fees of $ 0.4 million and non-cash warrant modification costs of $ 0.4 million. The Company recognized the $ 0.4 modification date incremental value of the modified warrants as compared to the original warrants as a non-cash issuance cost of the July Registered Direct Offering. Pursuant to the July Registered Direct Offering, we issued the following: • 97,877 shares of common stock and accompanying common warrants to purchase up to 195,754 shares of common stock at an offering price of $ 19.06 per share; and • Pre-funded warrants to purchase up to 46,441 shares of common stock and accompanying common warrants to purchase up to 92,882 shares of common stock at a combined offering price of $ 19.06 per pre-funded warrant, which is equal to the offering price of per share of common stock less the $ 0.0001 per share exercise price of each such pre-funded warrant. As of December 31, 2024, all pre-funded warrants have been exercised. The common warrants became exercisable immediately following stockholder approval on August 6, 2024, and will expire in August 2029. In connection with the July Registered Direct Offering, the Company amended 197,801 existing common warrants that were previously issued to certain investors such that these common warrants will have a reduced exercise price equal to $ 19.06 per share and include the same exercise price adjustments as the common warrants issued in the July Registered Direct Offering. These amended warrants became exercisable immediately following stockholder approval on August 6, 2024. As of December 31, 2024 , we have 11,687 common warrants outstanding at an amended exercise price of $ 8.60 per share that were issued in connection with the July Registered Direct Offering (the "July 2024 Warrants"). If such warrants are exercised, we will receive up to an additional $ 0.1 million in proceeds in connection with the warrants issued in connection with the July Registered Direct Offering. September 2024 Registered Direct Offering On September 18, 2024, we completed the September Registered Direct Offering with certain holders of our outstanding common warrants issued in connection with our previous offerings. We received $ 3.0 million in gross proceeds less total issuance costs of $ 0.5 million. Issuance costs include banker and legal fees of $ 0.4 million and non-cash warrant modification costs of $ 0.1 million. The Company recognized the $ 0.1 million modification date incremental value of the modified warrants as compared to the original warrants as a non-cash issuance cost of the September Registered Direct Offering. Pursuant to the September Registered Direct Offering, we issued the following: • 108,648 shares of common stock and accompanying common warrants to purchase up to 217,296 shares of common stock at an offering price of $ 8.60 per share; and • Pre-funded warrants to purchase up to 137,051 shares of common stock and accompanying common warrants to purchase up to 274,102 shares of common stock at a combined offering price of $ 8.60 per pre-funded warrant, which is equal to the offering price of per share of common stock less the $ 0.0001 per share exercise price of each such pre-funded warrant. As of December 31, 2024, all pre-funded warrants have been exercised. The common warrants became exercisable immediately following the date of stockholder approval on October 25, 2024, and will expire in October 2029. In connection with the September Registered Direct Offering, the Company amended 319,544 existing common warrants that were previously issued to certain investors such that these common warrants will have a reduced exercise price equal to $ 8.60 per share and include the same exercise price adjustments as the common warrants issued in the September Registered Direct Offering. These amended warrants became exercisable immediately following stockholder approval on October 25, 2024. As of December 31, 2024, all common warrants in issued connection with the September Registered Direct Offering (the "September 2024 Warrants") have been exercised. December 2024 Warrant Inducement On December 12, 2024, we entered into a warrant inducement agreement (the "December 2024 Inducement Agreement") with certain holders of our August 2023 Warrants, November 2023 Warrants, April 2024 Warrants, July 2024 Warrants and September 2024 Warrants (together, the "Existing Warrants"). Pursuant to the December 2024 Inducement Agreement, certain holders agreed to exercise for cash 823,544 Existing Warrants at a reduced exercise price of $ 7.50 per share. The Company also agreed to issue new common stock warrants to purchase a number of shares of common stock equal to 200 % of the number of shares of common stock issued upon exercise of the Existing Warrants, as applicable. Additionally, pursuant to the December 2024 Inducement Agreement, we issued 1,647,088 common warrants (the "December 2024 Warrants") with an exercise price of $ 9.53 per share which are exercisable immediately following the date of issuance and will expire in December 2029 . We received $ 6.2 million in gross proceeds from the exercise of these warrants less total issuance costs of $ 0.6 million, which includes banker and legal fees. The common warrants in connection with the December 2024 Warrant Inducement were equity classified. The fair value of existing common warrants immediately before and after were $ 3.5 million and $ 3.6 million, respectively. The fair value of the newly issued warrants was $ 7.3 million. Given the common warrants were equity classified, the modified fair value of existing common warrants and the newly issued common warrants to purchase common stock has been accounted for in additional paid-in capital as an equity cost because the modification was done in order to raise equity by inducing the exercise of warrants. As of December 31, 2024 , there were 1,647,088 December 2024 Warrants outstanding with an exercise price of $ 9.53 per share. If such warrants are exercised, we will receive up to an additional $ 15.7 million in gross proceeds in connection with the warrants issued as part of the December 2024 Warrant Inducement. The following is a summary of common warrant activity for the year ended December 31, 2024 :
Number of Weighted-Average Exercise Price Weighted-
Outstanding at December 31, 2023 18,859 $ 754.19 2.99
Issued 2,610,926 13.25 4.80
Exercised ( 958,152 ) 7.65 4.56
Expired ( 216 ) 29,629.60 —
Outstanding at December 31, 2024 1,671,417 $ 9.86 4.91
Exercisable at December 31, 2024 1,671,417 $ 9.86 4.91 The warrants are classified as an equity instrument because they are both indexed to the Company's own stock and classified in stockholders' equity, are recorded at fair value on the date of issuance and have no exercise contingency. For the years ended December 31, 2024, and 2023 , the valuation assumptions for warrants issued were estimated on the measurement date using the Black-Scholes option-pricing model with the following weighted-average assumptions:
For the Year Ended December 31,
2024 2023
Expected dividend yield 0.00 % 0.00 %
Expected volatility 113.70 % 104.01 %
Risk-free interest rate 4.98 % 5.40 %
Expected average life of warrants 5 years 1.2 - 5 years Equity Distribution Agreement The Company previously entered into an Equity Distribution Agreement with Piper Sandler (the "Equity Distribution Agreement") under which we could issue and sell through Piper Sandler shares of our common stock pursuant to a Registration Statement on Form S-3 (the "Shelf Registration Statement") which we filed on December 14, 2020, and expired in December 2023. We did not issue shares under the Equity Distribution Agreement in the year ended December 31, 2024. In the year ended December 31, 2023, the Company issued 448 shares of common stock at an average price of $ 3,678.74 under the Equity Distribution Agreement. We received $ 1.6 million in proceeds from the issuance of these shares. Lincoln Park Purchase Agreement On February 16, 2022, we entered into a Purchase Agreement ("2022 Purchase Agreement") and a Registration Rights Agreement with Lincoln Park (the "Registration Rights Agreement"). The 2022 Purchase Agreement and Registration Rights Agreement replaced the purchase agreement and registration rights agreement with Lincoln Park that we entered into on December 20, 2018. Under the 2022 Purchase Agreement, Lincoln Park committed to purchase up to $ 35.0 million of our Common Stock over a 36-month period commencing after the satisfaction of certain conditions, which are within our control, as set forth in the 2022 Purchase Agreement. The purchase price per share will be based on prevailing market prices; provided, however, that the prevailing market price is not below $ 1.00 . We agreed to and issued 61 shares of our Common Stock to Lincoln Park for no cash consideration as an initial fee for its commitment to purchase shares of our common stock under the 2022 Purchase Agreement. We did no t issue shares pursuant to Lincoln Park under the 2022 Purchase Agreement in 2024. For the year ended December 31, 2023, we issued 185 shares of our common stock to Lincoln Park under the 2022 Purchase Agreement and we received $ 0.5 million in proceeds from issuance of these shares. Rights Plan On November 8, 2020, our Board of Directors (the "Board") approved and adopted a Rights Agreement (the "Rights Agreement"), dated as of November 8, 2020, by and between the Company and Broadridge Corporate Issuer Solutions, Inc., as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each, a "Right") for each outstanding share of the Company’s common stock held by stockholders as of the close of business on November 23, 2020. One Right also will be issued together with each Common Share issued by the Company after November 23, 2020, but before the Distribution Date (as defined below) (or the earlier redemption or expiration of the Rights) and, in certain circumstances, after the Distribution Date. When exercisable, each Right initially would represent the right to purchase from the Company one one-thousandth of a share of a newly-designated series of preferred stock , Series A Junior Participating Preferred Stock, par value $ 0.001 per share, of the Company. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of ten percent ( 10 %) or more of the Company’s common stock without the approval of the Board. On November 4, 2024, we entered into Amendment No. 4 to the Rights Agreement and extended the expiration of such agreement to October 31, 2025, and changed the exercise price to $ 70 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. 2018 Stock Incentive Plan On June 1, 2018, at the 2018 Annual Meeting of the Stockholders, the Company’s stockholders approved a new 2018 Stock Incentive Plan (the "2018 SIP"), which replaced the Restated 2016 Plan on a go-forward basis. All stock options, RSUs or other equity awards granted subsequent to June 1, 2018 have been and will be issued out of the 2018 SIP, which has 2,844 shares of Aptevo common stock authorized for issuance. The 2018 Plan became effective immediately upon stockholder approval at the 2018 Annual Meeting of the Stockholders. Any shares subject to outstanding stock awards granted under the 2016 SIP that (a) expire or terminate for any reason prior to exercise or settlement; (b) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company; or (c) otherwise would have returned to the 2016 SIP for future grant pursuant to the terms of the 2016 Plan (such shares, the “Returning Shares”) will immediately be added to the share reserve under the 2018 SIP as and when such shares become Returning Shares, up to a maximum of 2,844 shares. On June 7, 2022, at the 2022 Annual Meeting of Stockholders, our stockholders approved the Amended and Restated 2018 SIP to increase the number of shares authorized for issuance under the 2018 SIP by 308 shares of common stock (adjusted for 1-for-44 and 1-for-37 reverse stock splits effective as of March 5 and December 3, 2024, respectively) . On June 7, 2024, at the 2024 annual meeting of the stockholders, our stockholders approved the Second Amended and Restated 2018 SIP (the "Second Amended 2018 SIP") to increase the number of shares authorized for issuance under the Amended 2018 SIP by 4,460 shares of common stock (adjusted for 1-for-37 reverse stock split effective as of December 3, 2024). As of December 31, 2024, there are 2,844 shares available to be granted under the Second Amended 2018 SIP. Stock options and RSUs under the Amended and Restated 2018 SIP generally vest pro rata over a one-year or three-year period. Stock options terminate ten years from the grant date, though the specific terms of each grant are determined individually. The Company’s executive officers, members of our board of directors, and certain other employees and consultants may be awarded options and/or RSUs with different vesting criteria, and awards granted to non-employee directors will vest over a one-year period. Option exercise and RSU grant prices for new awards granted by the Company equal the closing price of the Company’s common stock on the Nasdaq Capital Market on the date of grant. Stock-Based Compensation Expense Stock-based compensation expense includes amortization of stock options and RSUs granted to employees and non-employees and has been reported in our consolidated statements of operations as follows:
For the Year Ended December 31,
(in thousands) 2024 2023
Research and development $ 302 $ 684
General and administrative 767 1,509
Total stock-based compensation expense $ 1,069 $ 2,193 The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. The Company recognizes the compensation expense over the vesting period. All assumptions used to calculate the grant date fair value of non-employee equity awards are generally consistent with the assumptions used for equity awards granted to employees. In the event the Company terminates any of its consulting agreements, the unvested equity underlying the agreements would also be forfeited. Stock Options Aptevo utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted. Set forth below are the assumptions used in valuing the stock options granted:
Year Ended
Expected dividend yield 0.00 %
Expected volatility 103.63 %
Risk-free interest rate 4.18 %
Expected average life of options 5 years The Company did no t grant stock options for the year ended December 31, 2024. For the year ended December 31, 2023 , management has applied an estimated forfeiture rate of 29 %. The following is a summary of option activity for the year ended December 31, 2024:
Number of Weighted- Weighted-
Balance at December 31, 2023 352 $ 20,978.03 7.37
Granted — — —
Exercised — — —
Forfeited ( 24 ) 11,891.52 —
Outstanding at December 31, 2024 328 $ 20,772.78 6.39
Exercisable December 31, 2024 267 $ 24,476.16 6.03
Vested and expected to vest at December 31, 2024 321 $ 21,142.28 6.35 As of December 31, 2024 , we had $ 0.1 million of unrecognized compensation expense related to options expected to vest over a weighted-average period of 0.7 years. The Company did not issue options during the year ended December 31, 2024. The weighted-average grant date fair value per share of options granted during the year ended December 31, 2023 was $ 2,731.66 . The aggregate intrinsic value of options exercised for the years ended December 31, 2024 and 2023 was $ 0 . The total fair value of stock options vested for the years ended December 31, 2024 and 2023 was $ 1.0 million and $ 1.2 million, respectively. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the closing stock price of Aptevo’s common stock on the last trading day of December 2024 and the exercise price, multiplied by the number of in the money options) that would have been received by the option holders had all the option holders exercised their options on the last trading day of the quarter. Restricted Stock Units The following is a summary of restricted stock activity for the year ended December 31, 2024:
Number of Weighted
Balance at December 31, 2023 175 $ 5,866.69
Granted 1,823 29.56
Vested ( 117 ) 6,587.71
Forfeited ( 6 ) 267.14
Outstanding and expected to vest at December 31, 2024 1,875 $ 164.37 As of December 31, 2024 , we had $ 0.2 million of unrecognized stock-based compensation expense related to RSUs expected to vest over a weighted-average period of 1.2 years. As of December 31, 2023 , we had $ 0.8 million of unrecognized stock-based compensation expense related to RSUs expected to vest over a weighted-average period of 1.2 years. The fair value of each RSU has been determined to be the closing trading price of the Company’s common stock on the date of grant as quoted on the Nasdaq Capital Market. |
